Dollar Eases as Treasury Yields Slip Ahead of FOMC Minutes

The US Dollar Index sits at 101.61, down 0.27% in a session still open — the figure reflects live New York trading around 14:00, roughly three hours before the 17:00 close, not a final close-to-close move. The dip comes alongside a broader risk-on tone: the S&P 500 is up 0.66%, the Nasdaq 0.64% and the Dow 0.45%, while the VIX has fallen 3.35% to 15.00. Underneath, the dollar's softness tracks a modest pullback in longer-dated Treasury yields even as the policy backdrop stays firm: the Fed funds target sits at 3.75-4.00% after the September 16 hike, with most officials projecting at least one more hike this year — the live question remains further hikes, not cuts.

US yields eased modestly on the day: the 10-year fell 3.8bp to 5.273%, the 5-year fell 3.8bp to 5.028% and the 30-year fell 2.7bp to 5.638%, while the 3-month bill rose 1.7bp to 4.035%. These are small moves, not a repricing of the hiking path. The focus is Wednesday's release of the FOMC minutes from the September 15-16 meeting, due 14:00 ET, which markets will parse for detail on how many more hikes officials have in mind — the September decision was a 25bp hike, the Fed's first since 2023, passed 12-0. Elevated Treasury yields have been helping keep the dollar broadly firm into the release, per desk commentary.

EUR/USD trades at 1.1258 (+0. GBP/USD is at 1.3272 (+0.38%), lifted after BoE MPC member Catherine Mann said inflation has become 'embedded' and the labour market is 'static,' with markets pricing roughly 87% odds of a November 5 hike. USD/JPY holds 158.16 (+0.15%), little changed in a 157.9-158.2 range as Japan's fiscal and JGB-yield concerns offset a BoJ still committed to raising rates over time. USD/CAD is at 1.4222 (-0.27%), easing back from the Canadian dollar's weakest level in about 18 months as WTI crude edges up 0.16% to about US$89, though Scotiabank calls the pair 'range-bound' and technically stretched.

EUR/USD is up 0.30% to 1.1258, a second day of stabilisation after Monday's slide to its lowest since May 2025. The driver remains France's fiscal and political crisis: French yields have pushed above Italy's and Greece's, with the France-Germany 10-year spread at a multi-year high. Commentary cited in desk notes says the ECB's Transmission Protection Instrument is seen as unusable for France because the yield widening is judged 'warranted' by fundamentals rather than a disorderly dislocation; no FX intervention has been reported. The ECB raised its three key rates 25bp on September 10 (deposit rate to 2.50%), with President Christine Lagarde saying the Middle East conflict and Russia's war on Ukraine would keep inflation 'well above target' for an extended period. Today's docket carries German industrial production (forecast +0.5% m/m) and French trade balance (forecast -6.5B), but the bigger swing factor is Wednesday's FOMC minutes.

Later today: German Industrial Production m/m (forecast +0.5%, previous -1.1%) and French Trade Balance (forecast -6.5B, previous -6.7B) are due from the euro area, alongside Swiss Foreign Currency Reserves (previous 770B). The session's high-impact event is the FOMC Meeting Minutes from the September 15-16 meeting, due 14:00 ET. Also on the US calendar: weekly Crude Oil Inventories (forecast 2.1M, previous 0.9M), a 10-year Treasury note auction, and Consumer Credit m/m (forecast 14.4B, previous 18.1B). The UK's RICS House Price Balance (forecast -30%, previous -28%) also prints.